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There would be a case for writing down some impossibly high loans to a level which can be reasonably repaid, notwithstanding the moral hazard, as while the lending institution would take a loss in the short term it would end with a sustainable loan book. It cannot be considered acceptable for the mass of borrowers to have their problems solved by the prudent who have saved for the future and would lose their future lifestyle in the process.
David Todd
Feltham, Middlesex
Name that city
Sir: I don’t know how many Indians A.A. Gill (‘Oh, Kolkata!’, 18 October) spoke to before levelling patronising scorn at those Brits who still insist on calling the former capital of the Raj ‘Calcutta’, but some months back I quoted in your columns the Indian businessman who told me with a twinkle ‘Mumbai, Chennai and Kolkata are just for the front of buses — we still call them Bombay, Madras and Calcutta’. If Mr Gill had asked the way to BBK Square, the one-time administrative hub of the Raj, now renamed after the initials of three forgotten local politicians, he might well have met with puzzlement, followed with a smile and ‘Oh, you mean Dalhousie.’
Christopher Booker
Litton, Somerset
Can India help us now?
Sir: May I pass on my congratulations to India for its recent success against Australia in the Second Test and its recent successful rocket launch as it embarks on its first lunar mission. These are exciting times for an exciting country. May I just ask if this is the same India that was promised £825 million over three years recently by Gordon Brown for ‘development aid’? Is it also the same India who has reserves in excess of $200 billion? Perhaps, in the wake of our present circumstances, the Prime Minister would like to start writing begging letters back.
Mike Gore
London SW4
Shares not alike
Sir: Tim Congdon (‘Keynesianism still isn’t the answer’, 25 October) doesn’t fully understand the possibilities that preference shares can offer, which is a pity because his argument could be greatly strengthened. Preference capital can resemble a loan stock, and thus be treated like debt rather than capital, by being repaid on a fixed date; but it does not have to be redeemable. It is quite possible for it to be irredeemable and thus form part of the capital base. Classically, it would also be convertible into ordinary capital, so that the holder need not be tied into a fixed coupon permanently. The triggers for such an option to become exercisable would be predetermined and set out in the company’s Articles of Association. Preference shares could also acquire voting rights if, for example, dividends were missed.
A capital structure which included irredeemable but non-convertible preference shares carrying certain limited rights, like appointing a director, would allow the government to provide base capital without exercising control and therefore the banks would not come into public ownership and their debt would not be part of the public sector borrowing requirement. The shares could be quoted to allow for ultimate disposal.
As far as the coupon is concerned, I agree that the proposed 12 per cent interest rate is ridiculous: it only needs to be set at a reasonable margin above the yield on the gilt-edged stock issued to fund the share subscription.
D. R. Clarke
Somerton, Somerset
Meaning of the Act
Sir: In an otherwise well-balanced piece (Liddle Britain, 25 October) Rod Liddle says ‘The intention behind David Steel’s [Abortion] Bill of 1967 was to prevent the maiming of women by back-street abortionists’.
No doubt it was, in part. But there is now a widespread notion that the Bill was a modest proposal which has gradually over four decades been broadened and misused. Yet Clause 2 of the eventual Act provides for legal termination not only if a woman’s physical health would be harmed by continuing the pregnancy, but also if her mental health would be. Obviously, ‘mental health’ can be interpreted to mean practically anything. Opponents of the Bill warned at the time that this would lead to abortion on demand, and that is exactly what has happened for 40 years. The ever-increasing abortion figures Liddle quotes will appal many but should surprise no one.
M.G. Sherlock
Colwyn Bay, Wales
Negative nonsense
Sir: What is all this ‘negative growth’ nonsense about? Growth is something positive, or increasing, so how is it that we now have this bizarre phenomenon? It is as absurd as a car manufacturer telling us that a new model can go forwards at minus x miles per hour, rather than speaking about a reverse gear.
Anthony J. Burnet
Garvald, East Lothian
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